The Mumbai bench of the National Company Law Tribunal (NCLT) on Monday dismissed the petition filed by Cyrus Mistry’s investment firms against Tata Sons, its chairman emeritus Ratan Tata and others. Mumbai NCLT’s division bench—presided by B.S.V. Prakash Kumar and V. Nallasenapathy in an oral order ruled that Mistry was removed as Tata Sons chairman because shareholders lost trust in him. “We have not found any purported merit or issues raised by the minority shareholder in his petition under the Section 241 and 242 of The Companies Act, 2013,” ruled NCLT in a packed courtroom.
“The ruling of the National Company Law Tribunal is disappointing although not surprising. We will continue to strive for ensuring good governance and protection of interests of minority shareholders and all stakeholders in Tata Sons from the wilful brute rule of the majority,” said a statement from the office of Cyrus Mistry. “An appeal on merits will be pursued,” the statement added.
Mistry, through his investment firms Cyrus Investments Pvt. Ltd and Sterling Investment Corp. Pvt. Ltd, had filed with the NCLT a petition under Section 241 and Section 242 of the Companies Act which deal with oppression and mismanagement.
The Mistry camp had alleged that Cyrus Mistry’s removal as chairman, and subsequently as director, of Tata Sons Ltd was a result of oppression by Tata Sons, in which Tata Trusts owns 68%.
The second part of the plea focused on the alleged mismanagement by the Tata Sons board and Ratan Tata which caused revenue loss to the group. Mistry has also termed as “arbitrary” changes to the articles of association since his dismissal from office. The Mistry family owns 18.4% stake in Tata Sons, though holding with voting rights is under 4%.
This shareholding makes the Mistry family the single largest shareholder in Tata Sons.
According to Mistry’s petition, Tata Sons abused the articles of association and the governance framework to enable Ratan Tata to gain control of the company. The petition also names several directors on the Tata Sons board, including Amit Chandra, Ishaat Hussain, Ajay Piramal, Venu Srinivasan, Nitin Nohria, Farida Khambatta, Ralf Spelth, N. Chandrasekaran, N.A. Soonawala, R.K. Krishna Kumar and R. Venkataraman, and majority shareholder Tata Trusts.
Mistry’s contention is that the articles of association of Tata Sons by structure are biased against the rights of minority shareholders and thereby oppressive, a charge that Tata dismissed saying he has been on the board since 2006 and had never mentioned this till he was shown the door on 24 October 2016. Mistry took over the reins of the salt-to-software giant in December 2012 after the group patriarch Ratan Tata demitted office on attaining 70 years.
Mistry was named chief of Tata Group in November 2011 and took over as Tata Sons chairman in December 2012 after Ratan Tata retired. He had headed the group since 1991.
Ahead of the NCLT verdict in the Tata-Mistry case, Mistry had last week fired a fresh salvo at the Tata management, questioning the rationale behind some actions like the sale of Tata Communications to Bharti Airtel Ltd, massive debt-driven acquisitions by Tata Steel Ltd and its European merger with Thyssenkrupp AG, among others. #casansaar (Source - PTI, LiveMint)
|